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CIRCULAR

Guiding the implementation of the Prime Minister's Decision no. 13/2006/QD-TTG of January 16, 2006, on preferential financial and budgetary mechanisms for Da Nang city

Pursuant to the Government's Decree No. 60/2003/ND-CP of June 6, 2006, detailing and guiding the implementation of the State Budget Law;

Pursuant to the Government's Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Prime Minister's Decision No. 13/2006/QD-TTg of January 16, 2006, on preferential financial and budgetary mechanisms for Da Nang city,

The Finance Ministry hereby guides the implementation of preferential financial and budgetary mechanisms for Da Nang city as follows:

A. GENERAL PROVISIONS:

1. This Circular guides the implementation of regulations on preferential financial and budgetary mechanisms for Da Nang city, including the mechanism of budget management and the mechanism of mobilization of financial sources for development investment in Da Nang city.

2. Apart from the preferential financial and budgetary mechanisms provided for in the Prime Minister's Decision No. 13/2006/QD-TTg of January 16, 2006, and those guided in this Circular, the city shall also abide by general regulations on financial and budget management specified in the State Budget Law, the Government's Decree No. 60/2003/ND-CP of June 6, 2003, the Finance Ministry's Circular No. 59/2003/TT-BTC of June 23, 2003, and other legal documents on finance and budget.

B. SPECIFIC PROVISIONS:

I. Regarding the budgetary mechanism:

1. On the allocation of investment capital through ministries and central bodies and the support of investment capital from the central budget for key projects in the city:

1.1. In the period from 2006 to 2010, annually, basing itself on the city budget's capital-allocating capability and the central budget's capital-balancing capability, the central budget shall allocate capital and provide support for execution of important projects which are significant to Da Nang city and the provinces in the Central Vietnam key economic region according to the lists of projects specified at Item a, Clause 1, Article 1 of the Prime Minister's Decision No. 13/2006/QD-TTg of January 16, 2006.

1.2. Capital allocation and support principles: For investment projects managed by the city, the central budget shall provide targeted partial support for the city's budget for their execution. For projects located in the city and managed by ministries or central bodies, the central budget shall allocate capital through such ministries and central bodies for their execution. Modes of allocation are as follows:

1.2.1. For investment projects managed by the city: Annually, before July 25, on the basis of the total capital of projects approved by competent authorities and phased for annual execution, the execution progress of projects and the demand for project execution capital in the plan year with the city budget's allocated capital, central budget's capital given as support and other financial sources well defined according to regulations, the municipal Finance Service shall coordinate with the municipal Planning and Investment Service and concerned services, departments and branches in advising and assisting the municipal People's Committee in sending to the Finance Ministry and the Planning and Investment Ministry for sum-up and reporting to the Government for submission to the National Assembly the amount of targeted project-based allocations from the central budget for the city's budget in annual budget estimates.

1.2.2. For investment projects located in the city and managed by ministries or central bodies: Annually, on the basis of the total capital of projects approved by competent authorities and the execution progress of the projects, ministries and central bodies which have such projects shall prepare investment capital estimates and send them to the Planning and Investment Ministry and the Finance Ministry before July 25 for sum-up and reporting to the Government for submission to the National Assembly for decision according to the provisions of the State Budget Law.

2. Regarding rewards and targeted supports from the revenue collected in the city in excess of the central budget estimates:

2.1. Regarding rewards for the revenue collected in excess of budget estimates:

Annually, for revenues collected in the city and distributed between the central budget and the city's budget under the provisions of the State Budget Law, if there is an increase in the distributed central budget revenue over the estimate assigned by the Prime Minister, the city's budget shall enjoy a reward of 30% of this increase which, however, must not exceed the amount increased over the previous year's amount. The method of determining reward levels, principles for using reward money and method of accounting the reward amount into the budget shall comply with the provisions of Section 17, Part IV of the Finance Ministry's Circular No. 59/2003/TT-BTC of June 23, 2003.

2.2. Annually, if there is an increase in revenues wholly enjoyed by the central budget over the estimates assigned by the Prime Minister (excluding value added tax on imports; revenues not assigned to the city for management, which do not arise in the city but are only accounted and paid in the city; amounts of mutual ceasing according to the provisions of law, revenues left at units for via-budget management according to the provisions of law), basing itself on the state budget's capital-balancing capability and the city's demand for support, the Finance Ministry shall reach agreement with the Planning and Investment Ministry in reporting to the Government for submission to the National Assembly Standing Committee for decision the prioritized grant of targeted supports to the city's budget according to the provisions of the State Budget Law.

The above-mentioned annual amount of reward for the revenue collected in excess of the budget estimate and annual targeted support amount must be used strictly according to the provisions of Item c, Clause 1, Article 1 of the Prime Minister's Decision No. 13/2006/QD-TTg of January 16, 2006, on preferential financial and budgetary mechanisms for Da Nang city.

II. Regarding mobilization of financial sources for development investment:

1. Da Nang city may mobilize domestic investment capital by issuing local-administration bonds according to the provisions of the Government's Decree No. 141/2003/ND-CP of November 20, 2003, urban-project bonds or in other forms as provided for by law; the city's budget shall pay principals, interests and related expenses according to regulations.

If wishing to mobilize investment capital, the municipal People's Committee shall draw up a plan thereon and submit it to the municipal People's Council for decision according to the provisions of Point 1.3.4, Item 1.3, Section 1, Part II of the Finance Ministry's Circular No. 59/2003/TT-BTC of June 23, 2003.

2. Da Nang city may mobilize foreign loan capital for execution of important infrastructure projects which are to be funded with the city's budget on the principle that the municipal People's Committee shall devise a plan thereon, seek loan capital sources, and consult the Finance Ministry, the Planning and Investment Ministry and the Vietnam State Bank before submitting it to the Prime Minister for consideration and decision according to the mechanism whereby the Government borrows and re-lends loans to the city for execution of projects at the request of the municipal People's Committee. The city shall allocate capital from its budget for repayment of principals, interests and related expenses under the signed loan contracts according to the provisions of law.

The total debit balance of capital mobilized in forms specified at Points 1 and 2, Section II, Part B of this Circular must not exceed 30% of the city budget's total capital construction investment capital stated in the annual budget estimate decided by the municipal People's Council (excluding capital mobilized according to the provisions of law and irregular targeted additional allocations from the central budget to the city's budget for investment in projects - if any).

3. Da Nang city may apply the mechanism of providing partial interest supports for organizations which borrow capital for investment in important projects capable of retrieving capital (investment in industrial parks; environmental, public sanitation and water drainage services, etc.) according to the provisions of law. Specific levels and terms of interest support to be applicable to each organization and each project shall depend on the city budget's capability. The municipal Finance Service, Planning and Investment Service and concerned Services shall assist the People's Committee of Da Nang city in determining this annual support amount for inclusion in the city budget's estimates and submission to the municipal People's Council for decision according to the provisions of the State Budget Law.

4. Annually, on the basis of the budget estimate of official development assistance (ODA) capital sources and on commitments with donors, priority shall be given to allocating to Da Nang city ODA capital for projects incapable of retrieving capital for investment in important infrastructure projects which are to be funded by the city's budget; the city's budget shall allocate domestic capital portions to such projects. Management methods shall comply with the State's current regulations on management of ODA capital.

5. Regarding mobilization and efficient use of collected land use levies for socio-economic development investment in Da Nang city:

For the efficient use of land funds managed by the city, basing itself on the city's plans on the use of land funds under plannings approved by competent authorities and capital mobilization and infrastructure investment tasks decided by the municipal People's Committee, the municipal People's Committee may advance capital from the city's budget and mobilized capital sources (local-administration bonds and other mobilized sources according to the provisions of law) for infrastructure construction projects which are to be funded by the budget, and for relocation of production and business establishments from the inner city to the outskirts or into industrial parks for the creation of land funds; and on that basis, to auction land-use rights or public property according to regulations to generate capital for development investment and repayment of capital advanced from the city's budget and mobilized capital sources. Implementation methods are as follows:

- Basing itself on the city's planning on the use of land funds and projects approved by competent bodies which are to be funded by the city's budget, the municipal People's Committee shall decide to advance capital from the city's budget and from mobilized capital sources for projects. Capital advanced for investment projects based on their execution volume and progress, shall not exceed the estimate approved by competent authorities.

- The management and allocation of capital shall comply with the State's regime on management of state budget capital.

- The proceeds from the auction of land-use rights shall be used for repayment of capital advanced from the city's budget and mobilized capital sources; the remainder shall be wholly remitted into the city's budget (land use levies) for infrastructure development investment which is to be funded by the city's budget according to regulations.

6. The municipal People's Committee shall have to account and settle budget revenues and expenditures for the tasks defined in Section II of this Circular strictly according to regulations.

C. ORGANIZATION OF IMPLEMENTATION:

This Circular takes effect 15 days after its publication in "CONG BAO." Basing itself on this Circular's provisions, the People's Committee of Da Nang city shall direct the municipal Finance Service to coordinate with concerned agencies in organizing the implementation thereof; any problems arising in the course of implementation should be reported to the Finance Ministry for consideration and settlement.

For the Minister of Finance